“It’s like startup nation! There are so many different businesses. And there’s so much money out there—and you can find these people.” – Joanne Wilson, Angel Investor, NYC
Great advice, right? Then why do so many entrepreneurs and investors struggle to find one another?
The answer is that yes, there is a lot of money out there, but not all of it is right for a young business. Startup maturity, risk profile and readiness for capital can vary widely. This challenge is amplified when the business seeking capital is a social impact, mission-driven enterprise.
Mission-based entrepreneurs and investors have traditionally faced a narrow set of choices. Nonprofits could solicit grants. Profit-based companies looked for bank loans or venture capital, usually equity investment. The terms of these agreements were predicated on market-based assumptions of profit, return and scale. Social enterprises add a social impact mission to their business model, which sometimes constrains profit maximization and growth and can make these businesses simultaneously ineligible for grants and not competitive for traditional bank loans or venture investment.
That’s where Program Related Investments (PRIs) come in. This underutilized tool has been gaining traction recently for social impact investors and entrepreneurs as a middle ground between charitable grants and for-profit investments that can provide low-cost capital to mission-driven companies while allowing foundations to stretch their limited dollars for maximum impact. Because foundations can recoup their principal and even generate a return, they can recycle that money into additional impact investments.[…]
The full and original article can be viewed on Locavesting.com
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